India’s ambition to achieve net zero emissions by 2070 is significantly influencing the real estate market, particularly in the commercial sector. According to a recent report by Vestian Research, over 65% of Grade A office spaces in India’s top seven cities now hold green certifications, underscoring a robust commitment to sustainable construction practices.
Among the 1,362 Grade A buildings surveyed, 805, or 59%, are green-certified. This trend reflects the growing preference for sustainable architecture among developers and occupiers, driven by the increasing presence of global companies in India’s office market. The prominence of international certifications, particularly the Leadership in Energy and Environmental Design (LEED), is evident, with LEED accounting for 74% of green certifications as of Q2 2024. Furthermore, nearly half of these buildings hold the prestigious Gold certification under both LEED (49%) and the Indian Green Building Council (IGBC) (51%).
Despite Pune’s status as a hub for multinational corporations, it lags behind other major cities, with only 56% of its Grade A office buildings being green-certified. The data reveals that smaller office buildings, with built-up areas of less than 5 lakh square feet, make up 47% of green-certified structures, whereas those exceeding 10 lakh square feet constitute merely 19% of the total. Nevertheless, an impressive 90% of projects within the larger category meet green building standards, indicating a substantial focus on sustainability for larger developments.
However, green certification is scarce among office buildings with built-up areas below 1 lakh square feet. This indicates a lower adoption rate of sustainable practices among small and medium-scale developers and occupiers. The preference for sustainability is more pronounced in larger developments, reflecting a trend where significant investments in green construction are rewarded. Green-certified buildings command a premium of 12% to 14% over non-certified buildings. This price differential demonstrates the financial viability of sustainable development, as developers can charge higher rents for green-certified spaces. In Mumbai and Pune, green-certified buildings attract rental premiums ranging from 8% to 12% compared to their non-certified counterparts.
The union government’s consistent efforts to promote sustainable practices are likely to drive further adoption of green certifications in the real estate sector. As the market for green buildings continues to expand, developers and occupiers alike are recognising the long-term benefits of investing in eco-friendly infrastructure. This shift not only supports India’s environmental goals but also enhances the attractiveness of its office spaces to global occupiers, positioning the country as a leader in sustainable real estate development.
